A random variable X that only takes the values 0 and 1 is called an indicator
random variable. Let A = {ω ∈ Ω : X(ω) = 1}. The name indicator random
variable is used because when X = 1 this “indicates” that ω is in A. Usually
we write IA for this random variable. Conversely, if an event B is given, we
define its indicator, denoted IB by the rule IB(ω) = 1 if ω ∈ B and IB(ω) = 0
if ω ∈ Bc
. Note that 1 − IB = IBc .
Indicator random variables are the simplest kind of random variable, and
most other random variables are constructed in terms of them.